Aid plan for Big Three falters in Congress

Senate Majority Leader says auto companies need to submit a plan

WASHINGTON (MarketWatch) -- Democratic leaders said Thursday there is no deal on aid yet for the Big Three U.S. automakers, and asked the chief executives of those companies to return to Congress with concrete plans on how they would use federal funds to turn their companies around before getting any money from Washington.

"Until they show us the plan, we cannot show them the money," said House Speaker Nancy Pelosi, D-Calif., at a press conference.

'Until they show us the plan, we cannot show them the money.'
House Speaker Nancy Pelosi

Senate Majority Leader Harry Reid, D-Nevada, and Pelosi said Ford Motor Co.
F, -1.79%
General Motors Corp.
GM, -1.25%
and Chrysler LLC should submit a plan by Dec. 2. Reid said Congress would return the week of Dec. 8 if lawmakers get plans from the automakers that would return viability and sustainability to the industry.

The Democratic leaders spoke after a small bipartisan group of lawmakers reached a deal among themselves to buoy the industry.

But Reid said there weren't enough votes in the Senate or House to pass that compromise.

"Unfortunately, the sad reality is that no one has come up with a plan that can pass the House and the Senate and get signed by President Bush," said Reid.

Democrats have sought $25 billion in new loans for Ford, General Motors and Chrysler, but the White House and Republicans want the Big Three to tap into a previously approved $25 billion Energy Department loan program aimed at helping the companies retool.

Sens. Levin, Kit Bond and George Voinovich were working on the compromise to give the industry $25 billion in loans. The senators' plan would take the $25 billion from the Energy Department program. When the loans are paid back, the money would go back into the energy program.

"The auto industry shouldn't get a blank check," said Bond, R-Mo. Bond said the carmakers' plans must show how they'll use federal dollars to return to viability, financial stability and profitability.

Rep. Spencer Bachus, R-Ala., said he was glad there is "broad consensus" in Congress for the Big Three to take action to become competitive in the long term.

"We will be watching carefully to see if the auto industry can meet this challenge," said Bachus.

"We would hope that they would allow that to come up for a vote, but unfortunately, it looks like Senator Reid just wants to pick up his ball and go home for the next two weeks," she told reporters.

"And if that is the case, then one can only deduct that the Democrats don't believe that the auto industry really needs help, and really needs help now. We disagree. We think they need help," she said.

Shares of General Motors Corp. and Ford Motor Co. rocketed higher on the news of the compromise among the small group of senators. GM's shares closed at $2.88 on Thursday, up 3.2%, while shares of Ford finished trading at $1.39, rising 10.3%.

The compromise came after the chief executives of the companies and the head of the United Auto Workers testified before the Senate Banking Committee and House Financial Services Committee this week, arguing it would be cheaper in the long run for Washington to aid them than to let them fail.

Earlier Thursday, Ron Gettelfinger, president of the UAW, said at a news conference that one or two U.S. auto makers could collapse by the end of the year without government assistance.

Gettelfinger said that the U.S. auto industry needs "immediate assistance" from the Bush Administration and Congress, and that Congress must not adjourn without some sort of agreement.

Meanwhile, helping the automakers is proving unpopular with voters. Nearly half of U.S. voters -- 48% -- say it is better for the economy to let companies like GM fail rather than providing government subsidies to keep them in business, according to a Rasmussen Reports poll released Thursday.

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